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Real Estate Purchase Strategy

First time buyers are still important!

Since I’ve been involved in mortgage and real estate for nearly four decades, the media reaches out to me often for facts about our industry. This time. reporter Amy Fontinelle called me for information about first time home buyers. This is a subject near and dear to my hear, and she definitely got it right with this story. Amy leads off with.

Buying your first house can be exciting, but it can also be intimidating because of all the financial steps and real estate procedures you need to prepare for. Here’s what you need to know.

Check out the rest of Amy’s well-written article: https://www.massmutual.com/individuals/educational-articles/buying-your-first-home

You can see other articles where reporters have used my experience here.


falling mortgage ratesIf you own a home today, you are almost certainly being subjected to an avalanche of direct mail urging you to refinance your mortgage. Ads on the radio and TV are in your face constantly, making the same pitch.

If you’re like most people, you tune them out.

Now may be the time to act. Here’s why: First, you should understand how lenders determine the rates they offer. Almost all loans are sold on the secondary market; Fannie Mae and Freddie Mac are the two largest investors in these loans. They pool those millions of home mortgages into a type of bond called a Mortgage Backed Security (“MBS” for short), which is then traded on Wall Street like any other bond.

When there is high demand for the MBS, the price goes up. When that happens, rates drop–because the banks issuing the mortgages can now sell them to the investor for a higher price. The banks pass that improvement on to you, the consumer.

The chart below shows what the MBS have been up to since December 30 of last year. The green bars represent those days when the MBS price increased, the red ones, when it declined.

Do you notice a trend?

MBS rally

To put this into perspective, because of the long rally in bonds, we have seen mortgage rates drop  significantly. What’s significant? Here’s an example: On December 29 of last year, you could have locked a 30 year fixed rate mortgage at around 4.25% without paying any discount points. Today, the same loan will be 3.625%–that’s a 5/8% lower rate. That’s the lowest point in 12 months. To find a lower rate, you’d have to go back three years or more.

Is it worth refinancing now? Possibly. For a loan of $400,000, for example, with a rate of 4.125%, dropping your rate to 3.625% will cut your monthly payment by close to $150 a month. You’d save over $6,000 in the first five years–after recovering the cost of doing the refinance.

You should be aware that when rates have a prolonged rally as they have done this year, there is a very good chance that they’ll turn around and go back up with no warning. At a minimum, you should look at the numbers for your own situation to determine whether you can benefit.

If you’d like to start the process now, click on the “Get Started”  button below.


Please note: none of the foregoing should be interpreted as a rate quote. The interest rate you can get will be determined by a detailed analysis of your financial profile.


Since when is a mortgage like a rocket?

Anyone watching the Superbowl on Sunday couldn’t miss the ad series for Quicken Mortgage’s “Rocket Mortgage.” If you bought into their pitch, you’d think that you’d download their app, hit a couple of buttons on your phone and get your mortgage in minutes—like magic.

The government agency charged with protecting consumers, aptly named the Consumer Financial Protection Bureau, took notice, sending out this tweet:cfpb rocket mortgage tweet

Setting aside the possibility of returning to the too-easy lending standards that led up to the meltdown of 2008, the real problem with this ad is how much it disregards the real process of getting a mortgage today.

It doesn’t mention that a borrower will still have to supply income and asset documentation. They’ll still have to get an appraisal—and they won’t be able to order the appraisal until they’ve received all the disclosures required by law.

The ads don’t say that an underwriter will have to paper trail any “large” deposits showing up in the applicant’s bank statement. “Large” could be as little as $500.

They don’t tell you that you’ll have to write letters of explanation for every derogatory entry, or every inconsistency in the past addresses listed on your credit report.

If you believed Quicken’s pitch, you’d think they were the only geniuses who figured out automated underwriting. The fact is that almost ALL loan originators use one of two automated underwriting systems (AUS): Desktop Underwriter (Fannie Mae) or Loan Prospector (Freddie Mac). Any loan originator can get your information, run your credit and give you a preliminary loan decision in minutes.

Oh, and one other thing? We small, local lenders actually return phone calls.

News ReporterAre subprime mortgages coming back?

I speak to a lot of journalists; between the circulation of “The Mortgage Insider” and the fact that I’ve been around as long as I have, they look to me as an authority for their stories.

The latest was in the influential trade magazine, “Scotsman’s Guide.” Reporter Victor Whitman reached out to me last week to get thoughts on subprime mortgages, and whether they are making a comeback. I had an opportunity to get back on my favorite soapbox–that there is a false narrative about how hard it supposedly is to get a mortgage. I’ve been writing on that topic for years–most notably in this article.

You can find the Scotsman article HERE.

All about appraisals

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Whether you are buying or refinancing, getting a mortgage means getting an appraisal. Although a licensed appraiser does use some judgment in coming up with an opinion of value, the process is not as arbitrary or subjective as you might think. This movie explains how it all works.


One important part of your mortgage process is the appraisal. The lender will require this report to be sure there is adequate security for the loan they are about to give you. They want to have a good idea of the property’s value as part of the underwriting process.

Here’s how an appraisal is done. The appraiser, who is licensed by the State, will visit your property. He or she will measure it, take pictures and, for some loan programs, do a quick inspection to make sure there are no health or safety problems. The appraiser will describe the property, called the Subject Property, in a standardized way: square footage, room count, amenities, lot size, condition…things like that.

Then the appraiser will find at least three other properties (”comparable sales” or “comps”) similar to the subject and in close proximity that have have sold within the previous six months. They will describe each one of these in the same standardized way as they did the subject.

Having done that, the appraiser makes dollar adjustments to the comps to make them the equivalent of the subject. A comp with 200 square feet more living space than the subject would carry a negative adjustment of around $10,000. After adjusting the comps, the appraiser calculates a weighted average to arrive at an opinion of value. The lender will use this value to calculate its maximum loan. If your transaction is a purchase, the lender will use the lower of the appraised value or the agreed purchase price.

What is an escrow, anyway?

There’s all this talk about “escrow;” it opens, we’re in escrow, it closes. What is “it,” anyway? What happens there? Who does what? This movie explains all.


If you’ve never bought a house before, you may be wondering about this mysterious thing called “Escrow.” It opens, it closes, we’re in it…what is “it,” anyway?

The escrow is just a neutral third party whose job it is to make sure everyone gets what they agreed to. The escrow officer, usually someone who works for a title company, coordinates all the many documents that make up your transaction.

After all the parts of the transaction have been brought together, the escrow officer will prepare the “instructions.” This document has all the numbers and terms that you and the seller have agreed on—and they have to match perfectly, or else the transaction can’t go forward. When you sign the buyer’s instructions and all the other paperwork, you’re saying that those are the terms you agreed to.

After you’ve signed your name a whole lot of times, the escrow officer puts everything into a “funding package” and sends it off to the lender. A day or two later, the money is wired into the escrow. This is called “funding.” Documents are then recorded at the County and you own the house. This is the Close of Escrow. Most of it happens behind the scenes, but we think it is good for you to know what that whole process is.

For many first time home buyers, finding out that they’ll have to come up with closing costs along with their down payment can come as a rude surprise. For mortgages requiring a low down payment, like FHA, VA and 97% conventional loans, the closing costs can be more than the down payment. This movie explores what closing costs are, and suggests some strategies for handling them when you’re short on cash.

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We are all bombarded with ads promising the BEST rates. This movie will show you how to make your way through the mortgage jungle.

Ready to start an application? Go HERE.

Why mortgage rates move

The rate you can get today is probably different from rate you could have gotten yesterday. Rates are constantly on the move. Here’s how that works.

Homebuying 101–Pricing Adjustments

The rates you see on line are probably not the rate you can actually get. This movie explains why.

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